Scrap the old, buy the new

Desperate times need desperate measures, so Ford’s assessment today that a UK scrapping incentive for new car buyers could have a big effect on the car market is worth considering, particularly as the 2009 Budget approaches. The key stat is that France, Germany and Italy all now have subsidy schemes to encourage new car buyers to trade in bangers.

Desperate times need desperate measures, so Ford’s assessment today that a UK scrapping incentive for new car buyers could have a big effect on the car market is worth considering, particularly as the 2009 Budget approaches.

The key stat is that France, Germany and Italy all now have subsidy schemes to encourage new car buyers to trade in bangers.

The result? January car markets in those three countries declined by less than half of the UK’s shocking 33 per cent collapse.

Spain is another country lacking a scrapping incentive. Its sales plummeted by a whopping 50 per cent in January. Ford is also suggesting that the Spanish government should introduce something similar, fast.

Germany’s incentive is aimed at cars over nine years old, which has the added advantage of taking more polluting and less safe cars off the streets.

Mind you, a scheme that empties the UK of pre-2000 cars probably won’t be welcomed by every car fan. Still, automotive sentiment aside, the prospect of saving jobs in car factories, dealers and design centres is definitely worth pursuing.

Significantly, Ford’s experience in Germany is that drivers who had previously never bought a new car have changed a habit of a lifetime. That’s the kind of traffic that struggling car dealers desperately need right now.

We’ve been here before, of course, and the John Major government in the mid-1990s recession ruled out a UK scheme similar to one run by France and Italy for several reasons, despite much pressure from the SMMT.

One of the main objections back then was that the boost to sales would be temporary. But that’s exactly what’s needed now, at least 12 months of lift to push the market towards recovery in 2010/11.

The second objection was that British tax-payers’ money would end up subsidising overseas car factories.

But the government can hardly follow a protectionist route, after attacking the US for linking its economic stimulus package to ‘Buy American’

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To add to a previous blog , why should'nt you have the right vehicle for the right job?.Who needs a sports car just to look good, or a 4x4 to take little Justin (sorry , it was the first name that came to mind ,sorry!)too School.You will as i have noticed time and again that cars are bought mostly for the wrong reasons, mostly ego, lets be honest we do, but if the government said suddenly that you only could have the car you need and that you could get your three year old down as a 50% deposit, and if your car is older ,say up to 9 years you then could have a 75% deposit on your next car,whast would you do?. I know there are lots of ifs and buts in there but i'm sure you all out there in cyber space could work them , could'nt...answers in an e-mail too www.what theFCKhe on about.com !

I think with the situation in the car world scrapping should start at 3 years for numerous reasons.It should be done on a sliding scale say £2K being the lowest insentive too £500 for larger cars and 4x4 vehicles.I know that within that framework there are many ifs and buts for instance if your well off should you get an insentive or not?,should your choice of new vehicle be restricted?, and just to let other people have a say, will this encourage me and you buy a new/newer car?...any thoughts fellow road users ?

You presume its some rational scheme to get rid of old cars. Its actually to generate spending and avoid whats left of the car industry having even longer (this time unpaid) Halts in production. If the Krauts have it, we should have it? There might be great deals now but I don't see the car makers actually dropping prices much -its mostly massive dealer incentives and not everyone in the UK haggles so that helps the dealers also. Why not ask the Scots or Welsh to test the scheme out and see if it does make the difference. Was the VAT reduction not generous enough- looks like no

Also why are the EU getting blamed - it was UK banks overlending, punters overborrowing. Simple. Stricter emissions test, harder MOTs and any scheme that insures that only ultra-low emission/high MPG cars are whats replaced. Do we want more Jags on the road or Range Rover guzzlers currently gathering dust on the showrooms (for a good reason). There are punters out there wiith cash and little reason to save for 1% interest who just need some incentive to buy.

'If you want to know why your[Ford] sales are collapsing, you want to look a bit closer to home.'

- but they're not, at least Europe-wide. Figures released today for European new car registrations by ACEA show Ford's sales were down 19% in January compared to the average of -27% for all brands. Only VW/Audi fared better of the major producers.

Plus in Germany where the scrapping scheme has just got going sales of the new Fiesta climbed fourfold to almost take second place from the VW Polo in January. Sales of the Focus almost trebled. Would appear that whatever sales Ford may be losing in Britain through higher prices and poor publicity they are more than making up in usually VW/Opel dominated Germany.

May be worth looking at the overall figures Mr Rendell to see how the German scrappage scheme is affecting sales:

Greece ran a scheme (money off + tax incentives on ownership*) in the last recession in 90-'91..

It worked brilliantly and one of the reasons was mentioned by Julian above:

Significantly, Ford’s experience in Germany is that drivers who had previously never bought a new car have changed a habit of a lifetime. That’s the kind of traffic that struggling car dealers desperately need right now.

The rise in sales is temporary, but significant. Also the average car fleet age drops (at the time v significant as the everage greek family car in 1991 was a 14yo Fiat 128 or similar).

*car Tax there works as part of your annual declaration. Put simply, the more one declares taxable, the better car (in engine size terms only) one can get. Pretty much anyone can own up to 1600cc, you need a decent tax bill to own over 2000cc. Over values of Eur50k for new cars , gov tax increases too making for example a Boxter S almost twice the money of the plain 2.7 one...

It's called an incentive in this piece, but I've certainly read elsewhere of there being a compulsory scrapping of vehicles over a certain age.

There's not that many old cars around anyway, poor design and manufacture along with cynical marketing sees to that. And cynical is about what this idea is. Make do and mend. Just when did that become so passe?

It may start as an incentive but the people in charge of this country are going to have some pretty big bills coming over the next few years and they don't give a monkeys about anybody - that includes those of us who chose to drive old cars. If there is a way of taxing us to the hilt then you can be 100% sure that way will be found.